Consider the following model: Y i = α + β 0 X t + u t where
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Yˆ—i = α + β0Xt + ut
where Yˆ— = desired, or long-run, business expenditure for new plant and equipment, Xt = sales, and t = time. Using the stock adjustment model, estimate the parameters of the long- and short run demand function for expenditure on new plant and equipment given in the following table.
How would you find out if there is serial correlation in the data?
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Using the stock adjustment or partial adjustment model PAM the shortrun exp...View the full answer
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